Tuesday, September 30, 2008

As You See It: Sept. 30, 2008 - Santa Cruz Sentinel: "Thursday night Capitola's City Council gave its police captains a three-year 16 percent pay increase, thereby ensuring continued dramatic increases in city personnel costs despite the clear decline in city revenues. Kudos to Mayor Nicol who pointed this out as he voted against the pay increase. In city government, you can't spend what you don't have. Unfortunately it fell on deaf ears.

City revenues are already dropping sharply. Sadly, it appears the only way for the voters to prod the council into getting serious about reducing costs now is to withhold approval of additional sales taxes until they get their budget under control."

Monday, September 29, 2008

Patrick McDonald keeps setting records. When last heard from, the 59-year-old police officer had accumulated more than $123,000 in overtime last year, and his $189,000 in total earnings was a record high for the Buffalo Police Department. Now, McDonald’s pension is record setting, too.

At $105,361 annually, McDonald’s pension is not only the highest of any retired police officer in Buffalo, it’s also among the highest — possibly the highest — pensions of any municipal employee in all of Western New York."

Police Chief Steven Settingsgaard got his picture taken with President George W. Bush in July, when the president attended a fundraiser at Angus Weaver Farm in support of state Rep. Aaron Schock, who is running for Congress.

The campaign event was charging people $5,000 per photograph. Some questions have been raised in recent weeks over who got a free picture with the president, or if anyone did."

The city will have to come up with an additional $1.5 million to make state-mandated minimum contributions to its three pension funds in 2009, city officials said.

The additional cost is primarily due to the legacy effects of the 2001-02 downturn in the stock market, said Donald Boetger, of Boetger and Associates of Erie, the actuary for the city's pension funds."

GARY -- When Timothy Zakutansky became a firefighter, training officers praised his physical fitness that set a new standard for the Gary Fire Department.

But three years later, Zakutansky is gone, choosing a job in Iraq instead.

He's not alone. Since early June, 11 firefighters and almost that many police officers have resigned or retired, some going to other departments, others to private-sector jobs.

'This many guys have never left in such a short time in all the 17 years I've been on the job,' Firefighters Local 359 President Raynard Robinson said last week. 'There's no certainty in this job anymore.'"

Gary Mayor Rudy Clay warns repeatedly that his city could run out of money by Oct. 1 -- Wednesday.

His administration is trying to push a 20 percent employee pay cut to make up the difference, but not everyone is playing along. The Fraternal Order of Police and Firefighters Local 359 took the city to court.

Even if Gary survives a $13 million deficit this year, new property tax laws could cut its budget by $36 million in 2009 and $45 million in 2010, according to a state report.

Residents are beginning to sum up the situation with one word: 'bankruptcy.' The mayor and his most senior cabinet members adamantly deny even considering the option."

Saturday, September 27, 2008

City officials want to slash labor costs by $65 million over the next five years in order to stave off financial woes, and seek the cooperation of unions that represent city employees.

The reduction, combined with other measures outlined in a new city report -- including as many as 46 layoffs -- would keep Las Vegas from draining its reserves during an economic downturn that's expected to last at least two more years.

Friday, September 26, 2008

Nye County Sheriff Tony DeMeo speaks to the press, giving preliminary information on the gunfight and shooting of one of his deputies Sept. 19.

After a sleepless night, the Nye County Sheriff's Office (NCSO) called an afternoon press conference Sept. 19 to release preliminary details of the gunfight and subsequent shooting of Dep. Eric Murphy at Terrible's Lakeside RV Park approximately 12 hours earlier.

In addition to members of the Pahrump press, the major Las Vegas television stations were present with satellite trucks to broadcast Sheriff Tony DeMeo's statement. The training room at the NCSO was jammed with video cameras. Cords to power the half-dozen microphones in front of the podium snaked in a tangle covering the floor."

City leaders expected firefighters to approve the contract. 'I am surprised, but I always treat the glass as being half full so once again the glass is half full,” said Omaha City Councilman Jim Suttle. “Now we have to figure out how to fill it up.'"

We have conducted a total compensation study using the cities selected by the City of Vallejo in their wage survey.The complete study, as well as a narrative report, is available for review on our Web site.As you may expect, Vallejo officers did come out on top in the study but not by as much as you might think.In fact, when looking at direct compensation (essentially what an officer sees on their paycheck), Vallejo is ranked around the middle of the study.

One thing that you have to take into consideration is that Vallejo officers have already begun taking pay cuts while other departments in the study are receiving raises.This study was done based on wages as of June 30, 2008.If we were to complete a study as of July 1, 2008, adding in the scheduled raises for the comparison cities, you would see that the compensation in Vallejo is already moving into line with the other departments.If the city is too aggressive in their attempt to moderate public safety wages, they will quickly lose their place in the market and begin suffering the consequences, including increased turnover and more difficulty in recruiting qualified applicants. Attacking the base pay rather than balancing the cost of employee benefits is especially damaging.

To view the narrative report, use the links below.This narrative is available in PDF format or as a Web page.Links to the complete study and all documentation are included at the end of the narrative report.

I have little to quarrel with Ron York regarding the points he makes in his editorial last week titled "Why Spiking Has To Stop -- Now." But I do have two important points to add.First, pension spiking by public employees is viewed by most knowledgeable taxpayers as adding insult to injury. They see it as an outrageous gaming of the defined-benefit system.It's almost unbelievable that someone who is already going to be the beneficiary of a very generous, guaranteed income until death would both figuratively and literally work overtime to get an even fatter monthly pension check. Sadly, in most cases, it's perfectly legal.Whether it's ethical, however, is another question.

I've been speaking here, of course, about the form of spiking which uses income from overtime, unused sick days, etc., to boost the final salary figure upon which the pension calculation will be based. I could provide a number of outrageous examples, but I doubt that would serve any purpose for this readership.

The other kind of spiking, which involves a sudden increase in benefits when the formula is boosted and all current employees are given credit for prior years at the new rate, is different but is just as bad. Ron is right that "spiking" may not be the appropriate word for this, but it's close enough, and this form of spiking has the same -- or even worse -- impact on a pension fund. Individuals who spike their pensions and throw actuarial projections out of whack are bad enough, but a change in the formula that is applied retroactively to all employees in a department instantly causes a huge increase in future pension fund liability because nothing has been put into the pot by either the employers or the employees to cover it. Plans that are fully funded when the boost is granted will most likely soon discover -- if not immediately -- that they no longer are. Then, once again, it will be the taxpayers who suffer.

TO SUM UP: Spiking is a bad idea. It's fiscally irresponsible and bad public relations.It increases unfunded pension liabilities where they already exist and it can give birth to a new liability where one didn't previously exist. Plus, the impression of outright greed that it conveys will damage the image of public employees in the eyes of the very people who will be paying the tab-- the folks they claim to serve.

And, for police, it's especially bad because it can harm respect for law enforcement in general and can damage the cooperative relationship between citizens and cops that's so important in a community setting.

A FINAL COMMENT: From my perspective, the best thing that can happen is for spiking to continue. It will provide me with a never-ending stream of egregious examples of abuse that I can use to fuel the flames of resentment against the current unsustainable defined-benefit pension system, thereby hastening its reform. So to everyone reading this, let me say: Please ignore everything I just said and carry on with pension spiking as usual.

Jack Dean is president of the Fullerton Association of Concerned Taxpayers, and for four years he has been the editor of the pension-monitoring Web site PensionTsunami.com.

I am just going to give you the answer right up front. A fair employer paid pension benefit is ZERO. That’s right. What do you bums think? Look, us hard working taxpayers are tired of being Santa Claus for you ungrateful ingrates. If you want a pension, fund it yourself. Don’t ask me to pay you to not work. Suck it up and get a grip. Boy, that felt good.

What is that you say? Your employer does not provide you with a pension. That’s a whopper. I personally know that you have one of those obscene 3% @ 50 plans that provides you a 90% pension. The city even pays your 9% contribution. I can do the math. You fat cats and your union thugs are draining the city’s coffers and then trying to sell me on the big lie.

What do you think so far? Give me another chance. Employers do not GIVE anyone a pension. They just deduct money from your paycheck and put it into your pension plan. There is only one pay number that matters – total compensation per hour worked. Base pay, pensions, health insurance, etc. are just components of total compensation. What the pieces cost does not matter. What if you went shopping for an automobile and found that every dealer was asking a price of $25,000? Would you be concerned about the cost of the individual components in the vehicle?What if you were violently opposed to cigarettes and detested paying for the lighter in the car, just to find out it is not an option, but standard equipment? Would you be concerned about the cost of the lighter? What if the dealer tells you that the lighter costs $20,000 and the rest of the car costs $5,000, would you immediately leave and go to another dealer? Would you prefer instead to buy the same $25,000 vehicle from a dealer who had the cigarette lighter priced at $500 and the rest of the car at $24,500? Why not? That’s a big difference - $20,000 versus $500. The answer is obvious – you are buying a car, not individual parts that it is made from.Compensation is the same. The employer is concerned with the total cost and the employee is concerned with the total compensation package. Let us look at an employee who is getting a paycheck of $48,000 per year. In addition, the employer is putting 25% of pay into a 3% @ 50 pension plan and $1,000 per month toward the employee’s health insurance. The employer’s total cost per year is $72,000. (If you are lost, stop and do the math).

This department works a 40 hour week (5 days @ 8 hours), or 2,080 hours per year. This employee gets three weeks vacation, ten holidays, and ten sick leave days for a total of 280 hours of paid time off. Therefore, he works 1,800 hours per year. What is his total compensation per hour worked? The answer is $40 per hour. You are the mayor, what number are you concerned with when preparing the budget? If you answered anything other than the total hourly rate, go back to the top and start rereading the article.

Forget about the components and focus on total compensation per hour worked. Get your compensation package in a form that will draw the least attention and scrutiny. If you do not, you will be under constant attack from people who only focus on individual components. We would pay you a 500% pension if you would work 30 years at minimum wage. We would write you a paycheck of $72,000, rather than $48,000, if you would fund your own pension and health insurance.

Employers pay none of their money into your pension plan. They put your money into the retirement system. What is a fair pension? It depends on how much of a reduction you are willing to take in your paycheck.

The Downey Patriot: "DOWNEY— The Downey Police Officers’ Association, representing 99 employees, has reached a deal with the city of Downey on a new three-year contract that calls for yearly salary increases and boosts in other benefits.

According to a “memorandum of understanding” signed off on by the City Council this week, police department employees will receive a 5 percent pay increase effective June 30, 2008. Salaries will jump another 4.25 percent June 29, 2009, and another 4.25 percent June 28, 2010.

Education incentives will increase from 8.5 to 10 percent over three years, and the sick leave pay-off maximum cap has been increased from 1,650 to 1,900 hours.

The city will also pay 100 percent of the amount of unused sick leave time an employee has when they retire. The money will be deposited into a retiree health account to pay for medical expenses and insurance premiums."

AUSTIN – Managers of Texas' four big public pension funds say future benefits are secure and they have no plans to ask for financial help from state taxpayers in the wake of the collapse of several Wall Street firms.

Although many huge institutional investors routinely pumped money into the four financial concerns that tanked, leaders of pension funds for Texas teachers and other government employees said Thursday they placed only modest bets on AIG, Fannie Mae, Freddie Mac and Lehman Brothers."

TO ALL DELEGATES AND MEMBERS

Pat Lynch, PBA President

I am pleased to report that the tentative agreement for 2006/10 has been overwhelmingly ratified by the membership.

A total of 17,615 (74%) of our members returned ballots with 17,516 (99.4%) voting for ratification. According to the American Arbitration Association, this is the highest affirmation of a proposed contract that has been processed by them in at least 15 years. A total of 93 votes were cast against ratification and 6 were submitted blank.

This historic settlement includes provisions that ensure us continued salary growth and substantial health and welfare funding long into the future. The overwhelming approval of this contract demonstrates our unity of purpose and our willingness to stand strong together for the fair treatment that we have earned and deserve.

On behalf of the PBA Executive Board, I’d like to thank all of our members for your steadfast support and patience during these long and protracted ordeals. It is your willingness to fight for fair treatment that brought us this historic contract. We are now well on the way to a market rate of compensation and this administration pledges to continue on that road until New York City police officers regain their rightful position as the highest paid police officers in America.

Thursday, September 25, 2008

We prepared our two reports, a financial analysis and a compensation survey, to determine the validity of the two assertions made by the City of Vallejo in its bankruptcy pleading:

1 - We are insolvent (cannot pay our bills as they come due)

2 - Our insolvency is caused by excessive compensation for police and fire

The city is seeking relief on the compensation to solve the insolvency issue.

Financial AnalysisOur financial analysis is simply a compilation of data in the city's official documents, the Comprehensive Annual Financial Reports (the audit) and the Adopted Budgets (the budget). All of the numbers in the financial analysis are the city's numbers. I gave my opinion on the issue of insolvency in the blog that announced the report. I do not believe that the city's financial condition rises to that level, but it has been skirting the criteria. I believe that the city has the ability to resolve its problems outside of bankruptcy. Obviously, Judge McManus sees it differently.

Compensation Survey

Why did you use the agencies that are in the survey?We deliberately used the same cities that the city used. The sampling that the city used is a valid market sample. All samplings are subjective to some degree. None are obtained by sending Moses to the mountain top.

Would you have chosen a different list if you were doing it from scratch?I would have included San Francisco and San Jose. I believe that the market drivers (those who hire the most employees) should be included. We might not make a case for parity with them. In this situation, San Francisco and San Jose would probably not be ahead of Vallejo. Two other bay area cities might be - Sunnyvale and Hayward. Someone suggested that West Covina should have been included, even though it is in a different market place - the Los Angeles Basin.

How did you arrive at the pension and retiree health insurance amounts?We have an actuarial model to determine the value of the pension and retiree insurance. From that, we determine what the contribution rate needs to be. Seldom is the rate currently being paid equal to to value of the benefit due to either under or over funding.

Why did you use the best family plan premium for health insurance?This is the most common method being used. Getting actual average amounts being paid by the employer is virtually impossible. If you have some other methodology that is both workable and available in a timely manner, let us know. Getting complicated data out of the employers is not easy. If you push them too far, they will become uncooperative.

Why did you assume that all paid leave is used?Same issue that we have with insurance. We have tried in the past to get the actual amounts used - impossible. Oh, you might get it from the City of Vallejo, buts lots of luck with the other cities.

Are you guys independent examiners of the facts?I doubt if any reasonable person would see us as an impartial third party because we are not. We make our living working primarily for police unions. On a few occasions, we have worked jointly for police unions and cities - Pomona and Ontario are examples. The truth is, though, that we are the "Jerry Maguires" for police officers - "Show me the money." Besides doing this work for many years, I was a fireman for ten years while I was working my way through college. We do our best to be as honest and objective as we can, but we see police officers and firefighters as the home team. I believe it is fair to consider this when rating our credibility.

Ron York

Wednesday, September 24, 2008

We have just completed our Compensation Study for the rank of police officer in the Vallejo Police Department. The jurisdictions used in the survey are the same as the ones used by the City of Vallejo. There are two versions of the narrative report - HTML and PDF. You can see the Exhibits and supporting documents by clicking the links at the bottom of either version.

The reason we only did a survey of the police department is because we have a police database, but no fire database. We primarily work for police associations.

The bottomline (30 year career average hourly pay per hour worked) winner is? Vallejo.That's not what we wanted to see, but that is how it came out.It should probably not be a total surprise, if we consider research that we reported several years ago. Here is a link to the blog where we posted that information two weeks ago.

Update: Since posting the report, we have received additional information from the California Highway Patrol. The changes that were made based on this information change the total compensation per hour for the California Highway Patrol from $72.39 to $69.60. This makes the average total compensation for this study go from $78.88 per hour to $78.71 per hour. Once the final data we are waiting for is received from Oakland, we will update the complete reports.

Health Insurance Premium Inflation Now 5%

YEARLY PREMIUMS FOR FAMILY HEALTH COVERAGE RISE TO $12,680 IN 2008, UP 5 PERCENT, AS MANY WORKERS ALSO FACE HIGHER DEDUCTIBLES

Workers Pay An Average Of $3,354 Annually Toward Family Coverage,More Than Double What They Paid Nine Years AgoGrowing Shares of Workers Now Face Deductibles Of At Least $1,000,Including More Than One-Third Of Those Covered By Smaller Firms

WASHINGTON, D.C. – Premiums for employer-sponsored health insurance rose to $12,680 annually for family coverage this year – with employees on average paying $3,354 out of their paychecks to cover their share of the cost – and the scope of that coverage has changed, with many more workers now enrolled in high-deductible plans, according to the 2008 Employer Health Benefits Survey released today by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET). Key findings from the benchmark annual survey of small and large employers were also published today as a Web Exclusive in the journal Health Affairs. Premiums rose a modest 5 percent this year, but they have more than doubled since 1999 when total family premiums stood at $5,791 (of which workers paid $1,543). During the same nine-year period, workers’ wages increased 34 percent and general inflation rose 29 percent. This year many workers are also facing higher deductibles in their plans, including a growing number with general plan deductibles of at least $1,000 – 18 percent of all covered workers in 2008, up from 12 percent last year. This is partly, but not entirely, driven by growth in consumer-directed plans such as those that qualify for a tax-preferred Health Savings Account. The shift has been most dramatic for workers in small businesses with three to 199 workers, where more than one in three (35 percent) covered workers must pay at least $1,000 out of pocket before their plan generally will start to pay a share of their health-care bills – rising from 21 percent last year. For workers facing deductibles in Preferred Provider Organizations, the most common type of plan, the average deductible rose to $560 in 2008, up nearly $100 from 2007. “With rising deductibles, more and more people face a substantial amount out of pocket for their health care before their insurance fully kicks in,” Kaiser President and CEO Drew Altman, Ph.D., said. “Health insurance is steadily becoming less comprehensive, and it’s no wonder that in today’s tough economic climate many families count health care costs as one of their top pocketbook issues.” “Even modest growth in premiums and deductibles can result in financial challenges for many working families, particularly when coupled with high food and gas prices in 2008. But rising health care costs are also a burden on employers, particularly small businesses,” said HRET Interim President John Combes, M.D. The annual Kaiser/HRET survey provides a detailed picture of how employer coverage is changing over time in terms of availability, cost and coverage. It was conducted between January and May of 2008 and included 2,832 randomly selected, non-federal public and private firms with three or more employees (1,927 of which responded to the full survey and 905 of which responded to a single question about offering coverage). The annual percentage premium increase is calculated by comparing this year’s average premium to last year’s, a change in methodology designed to be more reflective of changes across the entire market.

Most Workers Are In PPOs, Though Enrollment Rises In HSA-Qualified Plans Preferred Provider Organizations continue to dominate the employer market, covering 58 percent of covered workers. Health Maintenance Organizations cover 20 percent of workers, with 12 percent in Point-of-Service plans, 8 percent in consumer-directed plans, and 2 percent in conventional indemnity plans. The share in consumer-directed plans – high-deductible plans that include a tax-preferred savings option such as a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) – has increased to 8 percent today from 5 percent last year and 4 percent in 2006. An estimated 5.5 million covered workers are enrolled in these plans, including about 3.2 million in plans that would allow the worker to establish an HSA and 2.2 million in plans with an HRA established by the employer. The growth in consumer-directed plans occurred mostly among workers at small firms (three to 199 workers), where 13 percent are now in this type of plan, compared with 8 percent in 2007. In firms with at least 200 employees, 5 percent of workers are enrolled in such plans – statistically unchanged from last year. By definition, these plans all have high deductibles – with the average general annual deductible for single coverage at $2,010 for HSA-qualified plans and $1,552 for HRAs.

Premiums for consumer-directed plans are generally lower than for other types of plans, though in addition to the premiums, employers may also contribute money to the savings accounts. On average, firms pay a total of $8,291 annually toward the cost of family coverage for an HSA-qualified plan, including a $1,522 contribution to the account. In comparison, firms on average contribute $9,495 toward the cost of family coverage in non-consumer-directed plans. Among firms offering such consumer-directed plans, six in 10 say that the primary reason is cost – and more than four in 10 say that in their opinion the most successful result has been lower costs. About four in 10 employers say that communicating with and educating their workers about the change was their greatest challenge in adopting consumer-directed plans.

Small Businesses And Their Workers Face Challenges As in the past, smaller businesses are significantly less likely than larger ones to offer health insurance. While virtually all large firms (200 or more workers) offer health benefits to their workers, only 62 percent of smaller firms do so. Just under half (49 percent) of the smallest firms (three to nine workers) offer health benefits. Among all small firms (three to 199 workers) not offering health benefits, nearly half (48 percent) cite high premiums as the most important reason for not doing so. As in the past, the survey finds that workers in small businesses that offer health benefits on average pay more for family coverage than workers at larger firms do – $4,101 annually for workers in small firms (three to 199 workers), compared with $2,982 annually for workers in larger firms. For single coverage, the opposite is true, with workers at small firms annually contributing less on average than workers at large firms ($624 vs. $769). “Many small businesses struggle just to provide any health benefits for their workers, and when it is offered, their workers on average pay more for family coverage and face higher deductibles than those working for big employers,” said Kaiser Vice President Gary Claxton, co-author of the study and director of the Foundation’s marketplace research.

Three In 10 Large Employers Offer Retiree Health Benefits The survey finds that 31 percent of large firms (200 or more workers) offer retiree health benefits this year, similar to the 33 percent who did so last year but less than half the 66 percent who did so in 1988. Among those large firms offering retiree health benefits, 69 percent say that at least some active employees will be eligible for retiree health benefits if they retire at age 65 or older, and 90 percent say that some active employees will be eligible if they retire before age 65. Within these large firms reporting that at least some active employees are eligible for early-retiree or Medicare-age retiree health benefits, about 78 percent of active workers would be eligible at age 65 or older and 72 percent of active workers would be eligible if they retire before age 65. Most

Firms Offer Wellness Programs The survey finds that more than half of all firms offering health benefits also provide at least one of seven wellness programs: weight loss programs, gym membership discounts or on-site exercise facilities, smoking cessation programs, personal health coaching, classes in nutrition or healthy living, Web-based resources for healthy living, or a wellness newsletter. However, relatively few firms offer incentives such as gift cards, travel, merchandise, or cash (7 percent), reduced premium (4 percent), or a lower deductible (1 percent) to encourage workers to participate in wellness programs. In addition, 10 percent of firms offering health benefits give their employees the option of completing a health-risk assessment to help employees identify potential health risks, and of those, 12 percent offer some sort of financial incentive for workers to complete them. “Large firms have invested in wellness programs and believe they improve health (79 percent) and reduce cost (68 percent),” said co-author Jon Gabel, senior fellow at the National Opinion Research Center at the University of Chicago.

Other key findings from the survey include:

• Drug benefits. Most plans now have a three- or four-tier system to determine cost-sharing for drugs. For workers in such plans, the average co-payments this year are $10 for first-tier drugs, $26 for second-tier drugs, and $46 for third-tier drugs. Co-payments for fourth-tier drugs, which may include costly biological agents and lifestyle drugs, averaged $75.

• Future outlook. When asked about their plans for next year, 14 percent of firms say they are “very likely” to raise workers’ premium contribution next year, and 12 percent say they are “very likely” to raise deductibles. Very few firms say they are “very likely” to restrict eligibility for coverage or drop health coverage altogether. The full survey is available online. The Health Affairs article based on the survey is also available online to subscribers or via the free link at the Kaiser Web site above. Now in its 10th year, the survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust. A research team at Kaiser and HRET conducted and analyzed the survey, led by Gary Claxton, vice president and director of the Health Care Marketplace Project at Kaiser, and Jon Gabel, senior fellow at the National Opinion Research Center (NORC) at the University of Chicago. NORC works on the project under contract to HRET.

CARSON CITY -- If Nevada's elected officials don't act quickly to rein in the cost of providing subsidized health care to their retirees, then programs and services from education to public safety will suffer as more money is diverted to a benefit that has disappeared from the private sector, a new Las Vegas Chamber of Commerce study suggests.

Since the state is not investing any significant amounts of money to cover the future cost of the benefit, estimated at $4 billion over the next 30 years, the bill accumulating now will come due well into the future, affecting Nevada residents who aren't even born yet, said Steve Hill, the incoming chamber chairman."

NEW YORK (CBS) ― New York City Mayor Michael Bloomberg is wielding a big axe, calling for deep budget cuts in response to the financial climate. The midyear budget cuts are intended to provide a financial cushion should the city's tax revenue, which is heavily dependent on Wall Street's profits, drop further.

From the cops on the beat, to the firehouse, to the classroom, the Wall Street collapse is pressuring the city budget big time. On Tuesday, Bloomberg asked department heads to draw up another round of cuts to the tune of $1.5 billion for this year and next. His people say it's a worst case scenario."

Key Vallejo employee contract talks that will likely decide how the city will face its bankruptcy challenges in the coming year have been pushed back for at least a week.

The talks, which were to begin yesterday, are awaiting a settlement involving the ground rules, participants on both sides said Monday.

Vallejo's lead city negotiator and interim human resources director, Sandy Salerno, said the city is reviewing the unions' negotiation commitments, which were submitted on Wednesday. Initially, Salerno said, union representatives were 'unilaterally opposed to ground rules.'"

The 30-unit, three-story Thomas Apartments on Mulberry Street downtown is gutted in a spectacular blaze, completely destroyed, though no lives lost and injuries minimal to its 50-some residents, nor to firefighters, which included every on-duty person and more."

Mayor Carty Finkbeiner, his chief of staff, and even the city's police and fire chiefs, will be among 64 Toledo employees forced to take two days off without pay to help close a multi-million deficit in this year's general operating fund budget.

The city may have a $3 million to $7 million general operating fund deficit by year's end, and officials are considering laying off more than a dozen employees."

WORCESTER— In an expected move, the City Council unanimously adopted a resolution last night opposing the repeal of the state income tax, which will appear as Question 1 on the November ballot.

Councilors urged the public not to take out any frustrations they might have with the levels of government by voting to repeal the state income tax, saying such an action would have disastrous consequences for the city."

The Peoria Police Benevolent Association is keeping details about the vote of no confidence its members took Monday night against the police chief close to the vest.

'This vote was demanded by the rank and file in order to express concerns over issues within the department and with the administration,' officials of the benevolent said in a news release Tuesday. 'However, it was the intent of the PPBA Executive Board to allow Chief (Steven) Settingsgaard the opportunity to address the concerns expressed by the rank and file prior to this information being released to the public.'"

1) For the last year that has been audited, FYE 2007, general fund revenues were at an all time record high. Page 20

2) Expenditures are also at a record high. Page 22

3) Over the last ten years, revenues have grown at an annual rate of 7.76%, while expenditures grew at 7.7% rate. Pages 41 and 43

4) Police expenditures grew by 6.91% per year. Page 43

5) Fire expenditures have grown at a rate of 8.84% per year. Page 43

6) Based on unaudited projections, 2008 will be a record high year for general fund revenues and expenditures. Page 55

7) The budget forecasts a decline in revenues, although the last ten years have had increases. Pages 41 and 55

8) The general fund has out-performed the national economy. Page 52

9) Most of the unfunded pension liability is due to investments and the value of the assets in the plan. Pages 50, 60 and 61

The typical city has an average annual growth in revenue in the 4% to 6% range. Vallejo is well above that. We have also prepared a comprehensive, total compensation survey of the Vallejo Police Department. It should be released Monday or Tuesday. It appears that Vallejo will be near the top, but it will not be outside the market range for the bay area.

Most cities live right on the edge. They have to or the tax cutters will strip the city into destitution. Consider this. A city with annual revenues of $100,000,000 that wanted to maintain a 10% of revenue fund balance would be right on edge constantly. Ten percent of $100,000,000 is $10,000,000. If revenues increased by 5%, the fund balance would need to grow by $500,000 0r 0.5% of revenues. This would require that expenditures be 99.5% of revenues. That is a razor thin margin, but it is political reality. You either spend it or lose it. Obviously, no one can run a large operation, such as the City of Vallejo, with that kind of precision. Each year, an attempt is made to compensate for last year's margin of error.

Without being disrespectful to Judge McManus or Finance Director Rob Stout, I cannot see how Vallejo meets the "insolvency" test. Whatever problems there may be in Vallejo, they look manageable to me.

Most of what I am reading suggests that there is a significant number of Vallejo residence that do not like the fire department and their union leadership. The leaders of the police and fire unions certainly have not helped their cause. One thing I have learned over the years is that no action taken by a city is done in a political vacuum. I have no problem with that, but it helps to understand the underlying pressures and motivations. Unpopular people, departments, and programs eventually come under attack. That is where the fire and police departments of Vallejo find themselves today. It is not just about money and mathematics. The final resolution of this conflict will come from outside the bankruptcy court. It will be a political decision made by the principals in this battle. I am not sure that anyone in Vallejo really understands that. I do not see anyone working toward that goal. I only see angry people lashing out at each other.

Ron

Everything in the exhibits and the narrative, except for Gross Domestic Product, comes from one of the city document shown above. If you cannot find where a number comes from, leave a comment. I will tell you where to find it. The entire report, except for GDP and the commentary, are the City of Vallejo's numbers.

There has been much discussion recently about the ratio of sworn police officers per 1,000 citizens. All of the research that we have done in the past has shown that the national average is about 2 sworn police officers per 1,000 citizens. However, such ratios are not universal. Starting on the East Coast where there is often 4 officers 1,000, it dwindles to 1 officer per 1,000 citizens in some California cities. The large, lightly populated center of the country has the 2 officers per 1,000.

Why is there such a disparity? The answer is easy. On the East Coast many jobs that could easily be done by civilians are staffed by sworn police officers. This practice melts away as you head West. When you get to California, every sworn officer does police work. If a job can be done by a civilian , it is. If you pack a pistol, you are on the street.

The link below shows the ratio for the 200 largest municipal police departments that we surveyed three years ago. Check it out for yourself.